Since then, the Brazilian real has advanced 3.3% and the Bovespa Index rose 5.5%. The iShares MSCI Brazil Capped ETF (EWZ) is up 8.6%.

“With the recent catch-up in asset prices, the market is now incorporating a much tighter election outcome,” wrote UBS in a research note published today.

So what’s the chance of Dilma losing a second term?

First of all, what drives Dilma’s approval ratings? It’s the economy, stupid, according to analysis done at UBS:

The Datafolha poll clearly indicates that economic factors are behind the recent slide in the government’s popularity. For instance, the share of the population who expect inflation to pick up rose to 65% in April 2014 from 59% at the beginning of 2014 and 33% at the end of 2010. This is the highest level since July 2002. Moreover, even if employment indicators continue to perform well in Brazil, the polls also indicate that the percentage of the population who expect the unemployment rate to rise has increased to 45% (from 39% at the beginning of 2014 and 24% at the end of 2010; see Figure 2). Finally, 72% of the surveyed population now desire change, close to the level seen at the end of Fernando Henrique Cardoso’s second mandate (76%).

According to UBS, as long as inflation and employment growth hover around 6.5% and 1% by the time the Brazilians go to the poll, Dilma’s approval rating will remain stable in the 36-37% range, which will give her a second term as the President.

What are the potential big upsets that could cost Dilma her presidency? UBS named three: energy rationing, protests during the World Cup, and corruption scandals, all of which sink equity sentiments. This equity rally driven by Dilma is fragile.

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APRIL 19, 2014 6:26 P.M.

Nils Montan wrote:

I am a US citizen, but hold a Brazilian permanent visa. The country is really going down the tubes. The biggest problem is security. We live in Curitiba, which used to be Brazil's "model city," and family members are getting assaulted weekly here. Same thing throughout the rest of the country. The police are a complete joke. Without security you have nothing. I don't know why anyone in their right mind would vote for Dilma?

APRIL 27, 2014 8:48 P.M.

Lucio wrote:

That is all you want to know about Brazil, right?
PROFIT for foreigners. But you do not want to know about your mafia cartels in Brazil,
unfortunately even north america do not help Brazil with it, and they
profit with their cartels here, that would never be the same low and fair profit like it is inside USA.

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Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. The Barrons.com Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools.